Although Treasury Secretary John Snow stated that the Bush Administration still has a strong dollar policy, the dollar ended the month sliding as the euro closed at 1.1174, a four year high. Several other currencies, including the Australian dollar, the Canadian dollar, and the Norwegian Krone reached three and four year highs against the dollar, indicating the problem is our currency, not theirs. Meanwhile, the Treasury began setting up more debt sales to cover the budget deficit, but first the debt ceiling has to be raised. Congress is playing political games with this increase, which is absolutely necessary if we want to pay government bills.

The latest trade deficit came in at over $40 billion again, and foreign money investing in U.S. securities is falling. One reason is the lower interest rates here than in Europe, which reduces the appeal of U.S. bonds. Contrary to that theory, the long bond climbed enough to make the yield slip to 4.77% as gold climbed. Someone still wants to invest in our debt.

Chairman Greenspan welcomed an opportunity to serve another term as Federal Reserve Chairman, but he wasn't very positive about the economy. Home refinancing was still supporting the markets, but state budget deficits will put another dampener on state spending this year. Mortgage demand decreased as home refinancing continued at a high rate. These statistics indicate that we are rolling over the top. On the other hand, the recent drop in the long bond yield may foster another drop in mortgage rates and another surge in mortgage financing.

Oil fell to close the month at $26.50, low enough for OPEC to be 'concerned'. That tells me that at that price level they will not be adding any production to push the price lower. Since all Iraq production is currently being internally consumed, it will not affect world markets until production is substantially increased.

World trade for 2002 was reported to have expanded over 2.5% compared to a decline in 2001, but the war was expected to limit growth for this year. Meanwhile, several large companies, such as General Motors and AT&T announced substantial earnings for the first quarter.

For the month, gold fell from 335.9 to 321.5 before closing the month strong at 339.1. Silver slipped from 4.46 to 4.39 before ending the month in an uptrend at 4.63. The XAU index fell from 66.9 to 63.8 before finishing the month at 65.3. The Dow closed at 8480 as it refused to drop.

fn         Fund                   1 mo   3 mo  12 mo   2 yr   3 yr
 1 ASA   ASA Ltd              .    1.6  -11.8   11.9   94.8  152.6
20 INIVX Van Eck Intl Inv GoldA    0.6  -15.5    3.1   83.6   86.4
 6 SGGDX First Eagle SGen Gold.    0.5  -12.5   14.9  119.4  135.8
19 USAGX USAA Gold            .    0.3  -12.6   -1.5   71.6   98.3
15 SCGDX Scudder Gold & Pr Mt S    0.3  -10.9    8.2   58.8   89.5
 9 LEXMX ING Pilgrim Pr Mtls A.    0.2  -10.6    2.8   67.4   88.0
 3 INPMX AXP Precious Metals A.   -0.1  -14.7   -7.4   33.6   60.0
 4 EKWBX Evergreen Prec Mtls B.   -0.2  -13.2    3.0   67.0   97.1
13 OPGSX Oppenheimer Gold A   .   -0.3  -14.1  -10.3   24.1   42.7
 8 GOLDX Gabelli Gold         .   -0.6  -14.0    4.8   87.3  128.7
21 VGPMX Vanguard Prec Metals .   -0.6  -11.6  -10.7   26.8   64.0
16 TGLDX Tocqueville Gold     .   -0.8  -12.3    5.2   86.1  113.0
10 FGLDX INVESCO Gold & Pr Mtl.   -0.8  -13.8   -2.5   48.8   50.6
 2 BGEIX Amer Cent Global Gold.   -1.0  -14.9   -0.8   75.7   89.8
11 MIDSX Midas Fund           .   -1.6  -16.4   -4.5   38.0   36.6
 7 FKRCX Franklin Gold & PrM A.   -1.6  -14.1  -11.9   18.1   43.6
12 MNTGX Monterey OCM Gold    .   -1.6  -12.3   14.0   95.3  105.9
14 RYPMX Rydex Prec Metals    .   -2.3  -15.4   -9.2   29.2   41.8
18 UNWPX US Global World PrecM.   -2.6  -11.6   -0.9   74.5   37.7
 5 FSAGX Fidelity Select Gold .   -2.9  -17.0   -4.5   53.6   71.0
17 USERX US Global Gold Shrs  .   -4.4  -16.1   -7.0   66.2   61.4

ASA Limited (ASA) held the top spot for the second straight month, which I consider a positive indication.

These numbers show that after the major surge last year, most funds have not had a very good twelve month period, particularly for the past three months.

fn          Fund                 pos  nav(04-30-03)
16 TGLDX Tocqueville Gold     .   54.6   21.46
 1 ASA   ASA Ltd              .   50.1   35.25
 6 SGGDX First Eagle SGen Gold.   46.7   11.67
15 SCGDX Scudder Gold & Pr Mt S   45.1   10.48
12 MNTGX Monterey OCM Gold    .   41.5    8.40
20 INIVX Van Eck Intl Inv GoldA   40.9    7.03
 8 GOLDX Gabelli Gold         .   36.8   10.77
 4 EKWBX Evergreen Prec Mtls B.   25.4   18.49
 9 LEXMX ING Pilgrim Pr Mtls A.   23.6    4.72
19 USAGX USAA Gold            .   19.2    9.54
 2 BGEIX Amer Cent Global Gold.   15.3    7.82
 5 FSAGX Fidelity Select Gold .   11.4   19.87
10 FGLDX INVESCO Gold & Pr Mtl.   11.3    2.38
11 MIDSX Midas Fund           .    3.6    1.27
18 UNWPX US Global World PrecM.   -0.1    8.90
17 USERX US Global Gold Shrs  .   -2.8    4.52
 3 INPMX AXP Precious Metals A.   -7.9    7.23
14 RYPMX Rydex Prec Metals    .  -13.1   26.17
21 VGPMX Vanguard Prec Metals .  -17.5    9.94
 7 FKRCX Franklin Gold & PrM A.  -19.7   11.14
13 OPGSX Oppenheimer Gold A   .  -20.5   11.90

Tocqueville Gold (TGLDX) and ASA still lead the pack this month, but all funds indicate that they are rounding out a base, and the recent rally may be a sign of things to come.

These numbers demonstrate a fund's ability to retain previous advances without falling out of bed when gold has a bad month or two. It's obvious which funds couldn't hold onto their gains and which have.

fn    fund                       assets
21 VGPMX Vanguard Prec Metals .   596
 5 FSAGX Fidelity Select Gold .   509
 2 BGEIX Amer Cent Global Gold.   349
 1 ASA   ASA Ltd              .   338
 7 FKRCX Franklin Gold & PrM A.   259
13 OPGSX Oppenheimer Gold A   .   146
20 INIVX Van Eck Intl Inv GoldA   145
18 UNWPX US Global World PrecM.   131
15 SCGDX Scudder Gold & Pr Mt S   124
19 USAGX USAA Gold            .   122
 8 GOLDX Gabelli Gold         .   105
10 FGLDX INVESCO Gold & Pr Mtl.   105
 9 LEXMX ING Pilgrim Pr Mtls A.   100
16 TGLDX Tocqueville Gold     .    86
 6 SGGDX First Eagle SGen Gold.    82
17 USERX US Global Gold Shrs  .    75
14 RYPMX Rydex Prec Metals    .    64
 3 INPMX AXP Precious Metals A.    44
11 MIDSX Midas Fund           .    39
12 MNTGX Monterey OCM Gold    .    38
 4 EKWBX Evergreen Prec Mtls B.    24

New investment funds come in, equities change and redemptions take out. Over the past two years, however, the total amount of assets under management by these funds has shown significant increases as would be expected for one of the best sectors of the market.

There are only so many valid gold equities worldwide and portfolio managers must allocate investments carefully.

The beta indicator measures the relative volatility of a fund's net asset value (nav) movement over the last 52 weeks as compared to the gold fund group average, 1.0. This number indicates volatility but does not specify the direction of movement, so it is only a measurement of relative activity of the price of the fund. Naturally, if the market is going up, you would want one at the top of this list. However, during a correction, the funds at the bottom would probably do better.

fn      fund                      beta
18 UNWPX US Global World PrecM.   1.55
17 USERX US Global Gold Shrs  .   1.51
 6 SGGDX First Eagle SGen Gold.   1.38
 1 ASA   ASA Ltd              .   1.37
20 INIVX Van Eck Intl Inv GoldA   1.21
 8 GOLDX Gabelli Gold         .   1.21
12 MNTGX Monterey OCM Gold    .   1.20
16 TGLDX Tocqueville Gold     .   1.07
 3 INPMX AXP Precious Metals A.   1.07
 2 BGEIX Amer Cent Global Gold.   1.06
 9 LEXMX ING Pilgrim Pr Mtls A.   1.02
19 USAGX USAA Gold            .   1.02
11 MIDSX Midas Fund           .   0.99
 4 EKWBX Evergreen Prec Mtls B.   0.97
10 FGLDX INVESCO Gold & Pr Mtl.   0.89
15 SCGDX Scudder Gold & Pr Mt S   0.85
 5 FSAGX Fidelity Select Gold .   0.85
14 RYPMX Rydex Prec Metals    .   0.82
13 OPGSX Oppenheimer Gold A   .   0.68
21 VGPMX Vanguard Prec Metals .   0.66
 7 FKRCX Franklin Gold & PrM A.   0.65

The beta for each fund may change as the fund advances and declines, but the general position on the ladder doesn't change much, except as a reference to other funds. As you can see, there is a big difference between management policies of different funds. The nav movement is a direct reflection of the types of equities selected by the fund manager.

Most funds had a poor month, but the rate at which the dollar is falling has given gold a jolt in the past week, and pulled up many funds from a much worse record. ASA has returned to the top of the list, what I consider to be a good sign. Most gold stocks have fallen much more than would be expected for the correction in the gold price and they have much room to climb if gold continues its late month rally.

With the absence of major war news, economics has returned to the news shows and the weak economy with job losses is taking center stage. While the Dow has held up lately, there remains a ton of bad news sitting on the table, which will undoubtedly hinder any attempt of the market to rally much more without good earnings reports. State deficits, increasing unemployment, national debt bouncing up against the legal limit, large corporate pension deficits with some defaults, and a housing market starting to peak in some areas do not a great economy make. While GM and AT&T have reported good first quarter earning, it will be tough for the overall market to match them.

It's interesting to see how quickly North Korea changed their attitude and agreed to discuss their situation with the U.S. and China instead of making dangerous declarations of military independence. They have no intention of taking on the U.S. military.

SARS has impacted the Far East, Hong Kong in particular, much more than the rest of the world, but the fear has spread enough to curtail some economic activity between countries, and could still put a dampener on economic growth worldwide. It's fatality ratio is higher than the Spanish flu which killed over 25 million in 1919 following World War I, and disease specialists are working hard to contain it before it spins out of control. China's economy will probably suffer the most.

The bottom line is that the U.S. economy is weak with little sign of recovery soon, and that is dragging the dollar down. When the dollar goes down, the price of gold almost always goes up, and that usually means gold funds too.